The Chancellor of the Exchequer delivered the 2020 Budget to Parliament on 11 March 2020. This includes a package of related policy documents, many of which highlight planned reforms to the financial services sector.

Of particular note for banks and investment firms is the policy statement on prudential standards published by HM Treasury, which confirms the government’s intention to implement:

  • CRD V and the related Basel III banking standards through powers in the forthcoming Financial Services Bill, including the more recent “Basel 3.1” reforms not incorporated within the EU CRR II regulation; and
  • an updated prudential regime for investment firms in the UK. The policy statement notes the instrumental role played by the UK Government in developing the EU prudential regime for investment firms (ie the Investment Firms Directive and Regulation), although there is no specific commitment to closely mirror the EU regime, or indeed the CRR II rules.

The possibility of divergence in approach is also hinted at in the closing comments, which note that HM Treasury is conducting a review to determine how the regulatory framework will need to adapt to the UK's position outside of the EU, including examining the ongoing allocation of regulatory responsibilities between Parliament, HM Treasury and the regulators. Both the Government and the regulators will consult on proposals to implement the various prudential reforms “in due course”.

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